What a DAF Grant Cannot Pay For

A donor-advised fund makes a lot of giving simpler. But it has edges, and most people find them the same way: they try to use a grant for something ordinary, like a gala table or a school bill, and the sponsor says no.

Knowing the edges ahead of time saves a lot of awkward phone calls. Here they are, with the reason underneath and what to do instead.

None of this is a knock on the ministries that host events or sell memberships. Galas and auctions are good ways to build community around a cause. They just belong on a different side of the ledger.

The Principle in One Line

When you gave to your fund, you may have received a deduction for that gift if you itemized. The money became charitable money. So a grant cannot turn around and deliver something of value back to you, your family, or your business.

Tickets, Tables, and Auctions

Galas, banquets, golf outings, and benefit concerts are some of the best evenings on a ministry's calendar. They are also the most common place people run into the rule. Tickets and tables come with a meal and an evening out, and that is a benefit.

The same goes for auction items, raffle tickets, and sponsorship packages that include tickets, signage, or advertising for your business. Pay for these from your own checking account, and let your fund do pure giving.

Some donors ask the charity for a receipt showing the charitable portion of a ticket, then pay the whole ticket personally. That is a clean way to support the event and keep the records straight.

Tuition, Dues, and Memberships

A grant cannot pay tuition for your children or grandchildren, even at a Christian school. It cannot pay church camp fees for your kids, or the cost of your own mission trip.

Mission trips deserve a note. A grant cannot pay for your own trip or your child's. It can generally support a church's or agency's missions program, which then decides how funds are used.

Memberships are trickier. A museum, zoo, or public radio membership often comes with perks like free admission or a gift. If the membership includes benefits, a grant generally cannot pay for it. Some sponsors allow a grant when you decline every benefit in writing. That is a sponsor policy, so ask first.

Pledges, People, and Politics

Three more edges round out the list.

1. 1

   Personal Pledges

   Whether a grant can fulfill a pledge you made personally depends on sponsor policy. Ask before you pledge.

2. 2

   Individuals

   Grants go to eligible charities, never straight to a person, however real the need.

3. 3

   Political Campaigns

   Grants cannot support candidates, campaigns, or political parties. Charities cannot campaign either.

Pledges deserve a word more. Some sponsors will make a grant to a charity you have pledged to, as long as the grant does not mention the pledge or claim to satisfy it. Others will not. Because policies differ, check before you sign a pledge card, not after.

No Splitting the Bill

Here is the move many people try: pay for the dinner portion of a gala ticket personally, and use a grant for the 'charitable' part. It seems fair. Most sponsors do not allow it, because the grant would still be tied to a benefit you received.

The simplest rule of thumb is this. If an event or package includes any benefit you plan to use, pay the whole thing yourself. If you want to support the event without attending, recommend a grant and decline the benefits entirely, if your sponsor allows it.

What You Can Do Instead

None of these edges mean you cannot support the same work. They just change the route.

• Pay for tickets, tables, and sponsorships personally, and ask your CPA how any charitable portion is treated.
• Recommend a general-support grant to the school, ministry, or museum, with no benefits attached.
• For a friend's mission trip, grant to the sending church or agency, which decides how funds are used.
• To help people in need generally, a grant to your church's benevolence fund lets the church decide whom to help, never earmarked for a particular person.
• When unsure, call your sponsor before you recommend the grant. It is faster than undoing one.

Why the Rules Exist

It can feel fussy to separate a gala ticket from a grant. But the rules protect something good. The money in your fund was already given away, often with a deduction attached, so using it for a dinner or a membership would be like getting a benefit from the same dollars twice.

The rules also protect your sponsor and your fund's future. Grants that deliver personal benefits can bring penalties for both sponsors and donors. A little care keeps your fund healthy and your giving above question, and the sponsor would much rather get a quick question than a grant it has to decline.